Who says we’re in a recession (and who says we’re not)

Are we in recession or not? It depends who you ask.

By one measure, the economy is contracting. Gross domestic product – a statistic experts use to measure economic output in the United States – fell at a rate of 0.9% last quarter, the government says Data released last month. This follows a contraction of 1.6% in the fiscal first quarter.

Those two quarters of negative growth are enough to satisfy what many consider to be the technical definition of a recession, although the National Bureau of Economic Research’s Business Cycle Dating Committee uses a much broader definition that takes into account personal income, consumer spending and savings. , industrial production and more. The NBER committee is tasked with officially determining when the country is and is not in a recession, but it has yet to take that step.

(However, it often does this retroactively, so we may be in a recession now.)

By other measures, the economy is doing well. The United States added more than 500,000 jobs in July, for example, indicating a strong labor market, and unemployment is very low by historical standards.

But amid rising prices — especially for essentials like groceries, gas and housing — and slowing spending, it’s hard for many ordinary consumers to believe the economy is picking up. wears well. This puzzling moment has economists, politicians and business leaders wondering whether or not we’re in a recession…and whether that even matters.

Here’s where some personalities fall.

No, we are not in a recession

President Joe Biden

“We’re not going to be in a recession, in my opinion,” he said. said last week, adding that the unemployment rate remains historically low at 3.6% and that business investment continues. “Hopefully we will move from this rapid growth to steady growth,” he added. “God willing, I don’t think we’re going to see a recession.”

Federal Reserve Chairman Jerome Powell

“I don’t think the United States is currently in a recession,” he said. told reporters last month. “And the reason for that is that there are just too many sectors of the economy that are working too well,” he added. He then pointed specifically to jobs: “It’s a very strong job market… 2.7 million people hired in the first half? It doesn’t make sense for the economy to be in a recession with this kind of thing going on. »

David Mericle, chief US economist at Goldman Sachs Research

Beyond GDP, “indicators of economic activity – wage employment, real personal income net of government transfer payments and industrial production – rose in the first half of this year,” he said. declared. said in a research note. Mericle added that while it will be difficult to bring inflation down without hurting the economy, “I don’t think we’ve fallen into a recession yet.”

Ads by Money. We may be compensated if you click on this ad.A d

Worried about protecting your hard-earned financial assets?

Gold IRAs help protect your investments by providing the diversification and asset stability you need. Click below to start investing today!

Invest in gold

Yes, we are in a recession

Cathie Wood, CEO of ARK Invest

“We are in a recession,” she said. told CNBC in late July, citing excess inventory at major retailers like Target and Walmart. Wood added that the jobs data, which has been the subject of the Federal Reserve and the Biden administration, is a lagging indicator.

A majority of American adults

Nearly two-thirds of voters think the country is in a recession, a recent Morning Consult survey found. Nearly 8 in 10 Republicans polled said they believed a recession was coming, compared to just over 50% of Democratic respondents.

Republican lawmakers

“We’re in a recession, and that’s going to make it worse,” Sen. Lindsey Graham, RS.C., said during a press conference last week, referring to the Democrat-led Cut Inflation Act. “I’m glad we have strong job growth,” added Sen. Bill Cassidy, R-La., “but we’re in a recession,” citing the rapidly cooling housing market as evidence.

Ads by Money. We may be compensated if you click on this ad.A dAds by Money Disclaimer

Grow your home equity with cash-in refinance

A cash-out refinance allows you to borrow against your existing capital, freeing up additional cash for debt consolidation, education costs, and more. Click below to get started.

start today

The third option: Maybe soon?

Other experts say that while we’re probably not in a recession right now, there’s a good chance we’ll be heading into a recession in the coming months.

“Are we in a recession? We don’t think so yet,” said Joel Prakken, chief economist at S&P Global Market Intelligence, recently. say it New York Times. “Are we going to be one? It’s a high risk. »

Harvard University economists Alex Domash and Larry Summers, the latter of whom served as Treasury Secretary under President Bill Clinton and economic adviser to President Barack Obama, Argue that the combination of high inflation and low unemployment indicates a “substantial likelihood” of a recession within the next two years.

At the end of the line ? The economy is in a strange place. It contracts by some measures and expands by others, leading experts to be divided on their predictions. What is certain is that recessions – and expansions, for that matter – are an integral part of the business cycle, and there are ways to prepare for a downturn.

It’s true whether it happens in a few weeks, a few months or a few years.

More money :

The economy is contracting. Are we officially in a recession?

Does this bear market mean a recession is coming?

Is a recession coming soon? This bond market indicator is flashing red

About Lucille Thompson

Check Also

People with student loans from the old federal program seek relief

Comment this story Comment Elizabeth Price wondered why she kept getting statements for her federal …